Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

The Car Dealership Financing Guarantee Appropriation Bill 2009 provides for a standing appropriation to enable claims to be paid under the deed of guarantee in respect of the Australian government guarantee to support interim funding to car dealerships executed on behalf of the Commonwealth on 23 December 2008. On 5 December 2008, the Treasurer announced the establishment of a special purpose vehicle, an SPV, with the support of Australian banks, to provide liquidity to eligible car dealers who were left without financing as a result of the departure of two large automotive finance leasing companies from the Australian market following the onset of the global financial crisis. The two companies are GE Money Motor Solutions, a subsidiary of GE Money, a division of GE Capital, one of four main businesses of General Electric; and GMAC Australia LLC, GMAC’s automotive and motorcycle finance business in Australia. GMAC is the automotive finance business of General Motors Corporation.

It is estimated that one-quarter of new car dealerships obtained wholesale floor plan finance though GE Money Motor Solutions and GMAC Australia LLC. The SPV, otherwise known as ‘OzCar’, was established as a trust on 2 January this year. Under the agreements negotiated with the Commonwealth Bank of Australia, the ANZ Bank, the National Australia Bank and Westpac, the four major banks will provide liquidity to OzCar through the purchase of AAA rated OzCar securities. Most of these securities will require a Commonwealth guarantee so that they qualify as AAA in order for the four major banks to purchase the securities. Having raised funds through the sale of securities to the banks, OzCar will make available funding for 12 months to eligible car dealerships requiring finance.

In his second reading speech for the bill, the Assistant Treasurer told the House that most of the former GE and GMAC dealerships had managed to secure alternative financing, primarily through the remaining lenders. As a result of the orderly wind-down of GE and GMAC loan books and alternative sources of finance, the initial estimate of $2 billion to finance future loans was reduced to $850 million. The Assistant Treasurer stated that the final figure will be much less and the appropriation to support the Commonwealth guarantee will apply to around $550 million of the securities issued by the OzCar SPV.

Let me go to the issue of new vehicle sales. New vehicle sales figures for April 2009, released on 5 May by the Federal Chamber of Automotive Industries, show that just under 64,000 passenger motor vehicles, SUVs and commercial vehicles were sold in April 2009, a fall of some 24 per cent compared with the same month in 2008. In the year to date, a total of just under 277,000 new vehicles have been sold, which is a fall of just over 20 per cent compared with the same period last year, suggesting annual sales for 2009 of 840,000, compared with over 1,012,000 sales in 2008. The fall in new car sales reflects the broader slowdown in the Australian economy and globally, with the four local motor vehicle manufacturers reducing production in response to falling demand. Production levels are the lowest since the 2001 downturn and have led to temporary stand-downs and a four-day week for automotive component manufacturers.

According to the explanatory memorandum to the bill, the overall contingent liability for the Commonwealth is around $550 million, comprising 45 per cent of the remaining GE Money and GMAC loan books and 85 per cent of the Ford Credit loan book. To limit the risk to taxpayers’ funds, the SPV will only be available to advance funds if it is satisfied that the dealership is not subject to any insolvency event. In the event that the deed of guarantee is called upon, any payment made under it will reduce the underlying cash balance. The explanatory memorandum states that:

The extent of the impact on the underlying cash balance will depend on borrowers’ default and borrowers’ ability to meet any SPV’s claims. Under the Series Notice, the Trustee indemnifies the Commonwealth (out of the assets of the Trust) against any amounts paid or required to be paid by the Commonwealth under the Guarantee.

No securities have yet been issued under the OzCar SPV. However, as the guarantee covers most of the Ford car dealerships and as new loans are taken out in the new financial year, the SPV will underpin the next 12 months of trading by dealerships. With this assistance from the government, new car sales are forecast to recover, as we hope. The coalition supports this bill.

Richard Marles (Corio, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Car Dealership Financing Guarantee Appropriation Bill 2009. When the global economic crisis came upon us last year, two car financing companies ended up leaving the Australian market as a result of the global credit crunch. One was GE Money Motor Solutions and the other was GMAC, the auto financing business of General Motors Corporation. Between these two financing companies, about a quarter of the wholesale floor plan finance was supplied to new car dealerships within this country. In addition to these two car financing companies leaving the Australian market, Ford Credit also reported serious liquidity issues. This presented an enormous difficulty to car dealerships around Australia. In fact, it is fair to say that it is impossible for a car dealership to survive without a viable floor plan financing arrangement in place.

So, as a result of that, the Rudd government acted very swiftly to deal with what was a very serious problem for this particular segment of the economy. We dealt with this swiftly, as we have dealt with the global economic crisis swiftly throughout the entire Australian economy. On 5 December last year the Treasurer announced that a special purpose vehicle-financing vehicle would be created to deal with this situation, and on 2 January this year this special purpose vehicle, known as OzCar, was established as a trust. The point of OzCar was to provide liquidity to car dealerships so that they would be able to put in place wholesale floor plan financing arrangements in order to provide finance for the purchase of cars.

Car dealerships within this country are a critical segment of our economy. If we look at the auto industry as a whole, it employs something in the order of 66,000 Australians. When you consider that a large proportion of those vehicles which are made in Australia are also sold and used in Australia, then you see the significance of retail car dealerships within the entire economy. It is a particularly important sector of the economy within regional Australia.

My electorate of Corio covers Geelong, where we have long been known as a car town. Indeed, to be more specific, we have been known as Ford town. Ford has played a significant role in Geelong since the 1920s, and this is not just through the making of cars or through the employment of car-manufacturing workers but also through the enormous contribution that Ford makes to the town in which it is based, such as Geelong. As one example of that, Ford has been the long-term sponsor of the Geelong Football Club. Indeed, that sponsorship arrangement between Ford and the Geelong Football Club represents the single longest sponsorship arrangement in world sport. That says something of how significant a company like Ford is to a place like Geelong.

But it is not just those people who are involved in the manufacturing of cars in Geelong—and there are many thousands who are employed by Ford in that endeavour. In addition to that, we also have in Geelong the largest new car Ford dealership in Australia: Rex Gorell Ford, which has been in business for 24 years. Indeed, the Rex Gorell Group itself employs 320 Geelong workers.

The Gorell family are a long-time established family within Geelong; their roots in our city go back to the mid-19th century. Not only do they contribute to Geelong through being a major employer within our region but, indeed, the Gorell family and in particular Rex Gorell have been leading citizens within our community and have made generous contributions of their time and effort to many aspects of the Geelong community. Rex Gorell Ford is just one dealership, and there is just one person in charge of that dealership, but they represent how important car dealerships are to a place like Geelong and they represent how important car dealerships are as a segment of the Australian economy.

So, with that in mind, the special purpose vehicle OzCar is playing a very important role in terms of ensuring that this segment of the economy survives what is a very difficult period of time. It works in the following way: OzCar is a special purpose financial vehicle which will be managed by Perpetual Nominees and Credit Suisse. It will work closely with both the Commonwealth Treasury and the four major Australian banks: ANZ, the Commonwealth Bank, Westpac and the National Australia Bank.

OzCar will provide finance in the following way. The four major banks will purchase securities from OzCar and these securities will all have a AAA rating under the Standard and Poor’s rating system. They will have that rating by virtue of a guarantee provided by the Commonwealth government. That guarantee was provided on 23 December last year by a deed of guarantee. Through the funds raised in this way, OzCar can then provide finance to eligible dealerships to ensure that these dealerships have in place a wholesale floor plan financing arrangement. This provision will be in place for 12 months.

At the outset, it needs to be said that the car dealership sector of our economy have dealt very well with GE and GMAC leaving the Australian market. Indeed, a very large proportion of the financing which was previously covered by GE and GMAC has now been covered by other finance providers. It is a credit to the car dealership sector that they have managed to put those arrangements in place. But, nevertheless, OzCar will still be needed, particularly in relation to Ford Credit.

This will not be, in any sense, a blank cheque for those car dealerships. Very significant prudential parameters will be put in place around the way in which this finance will be provided. First of all, in order to be an eligible car dealership you need to have previously had in place a car financing arrangement through either GE Money Motor Solutions, through GMAC or through Ford Credit. The finance that will be provided by OzCar will only be provided to wholesale floor plans.

Auditors will be put in place to monitor the stock management systems of any car dealership which seeks to avail itself of finance through OzCar. While there will be no guarantee fee associated with the guarantee provided by the Commonwealth, while there will be no guarantee fee charged in the pricing of this finance—and there will not be a fee charged, because it is important not to place any additional pressure on these loans and on consumers in what is already a stressed part of our market—and that fee will not be part of the charging system, finance will be issued at a price with sufficient income and reserve buffers in order to meet any losses. In addition to all of that, dealerships will need to demonstrate that they are viable dealerships in order to avail themselves of finance through OzCar.

All of those prudential parameters which are placed around the providing of finance from OzCar to these dealership are being put in place so that there are significant protections upon the public purse and so that the situation arising where the guarantee may come into place hopefully does not occur at all. But, in any event, these parameters are being put in place to avoid the risk of the guarantee ultimately needing to be called upon.

The specifics of this bill in the context of this initiative provide for the appropriation for any claims that are made as a result of the guarantee which is given by the Commonwealth government in relation to the securities which are issued by OzCar to the four major banks. Of course, that guarantee is critical in this whole package in order to attract the AAA rating of Standard and Poor’s. In providing for this appropriation, there is not a specific limit established within this bill. The extent of any claims on the public purse will obviously depend on the extent to which the guarantee is called upon where any loans that are issued by OzCar are not fulfilled. So it is impossible to state exactly what appropriation, if any, will ultimately be required. But the contingent liability associated with this is estimated to be $550 million. That equates to 45 per cent of the remaining GE and GMAC loan books and 85 per cent of the Ford Credit loan book.

This is a very significant initiative. It is one that was put in place very rapidly and very efficiently in order to deal with a crisis that was imposing itself on a very important segment of our society. Were a situation to have occurred such that significant numbers of car dealerships found themselves in a position where they were unable to trade, that would have resulted in a significant loss of employment throughout the economy, particularly in regional areas such as Geelong. So it is very much to the government’s credit that it was able to act as quickly as it did, similar to the way in which it acted quickly in dealing with this global economic crisis more broadly. The government acted swiftly in providing security in our economy through the bank guarantees and the various stimulus packages, and this has provided a means by which we have been able to guide our economy and our society through a very difficult time.

This is an important initiative for a very critical sector that is already doing it tough. The year-to-date figures for car sales in Australia through April this year show that 276,935 vehicles were sold, compared to sales of 347,514 vehicles through April last year. That is a difference of 70,579 cars or a decline in sales over that period of 20.3 per cent. This is a sector of our economy that is already doing it tough as a result of the global economic recession. It is very important that it does not receive a double blow through the credit crunch which is at the heart of the global economic recession. This bill plays an important part in a very important initiative to ensure that this sector does not receive that double blow. For that reason, I commend it to the House.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

As the member for Corio informed the House, the Car Dealership Financing Guarantee Appropriation Bill 2009 is necessary and urgently required legislation simply because certain providers of capital, based primarily in the United States, decided that they had to repatriate the funds they had available to head office. As a consequence, the Australian retail and wholesale vehicle industry found itself in a position of not being able to finance even its stock on hand, which is known as floor plan. The government, by a fairly simple mechanism of guarantees—with a contingent liability which, in this case, I doubt will be called upon—was able to give security to the industry.

As the second reading speech informed us, even at this stage a number of car retailers and wholesalers are finding that alternative opportunities are appearing. It has always been a very profitable sector for the finance industry, and within Australia it is surprising how few people do not pay their debts of this nature. It is not a bad bet, because an interesting aspect of this particular form of financing is that the security of a vehicle is well known. More particularly, as I experienced for many years in the earthmoving industry, we would go to the finance companies to finance things like Caterpillar graders that were often worth more when you traded them in than the cash price you paid for them originally. We were still charged usurious interest rates on an item that was better than a block of land. It had a fairly well-defined value and the only risk, really, was that it might not have been adequately maintained during its working life. It tended to maintain its value in nominal terms and, of course, if it could not be sold in one locality, then, unlike a block of land or a building, it could be shifted to where the market was more prosperous. I just make that point in passing because I remember cursing that on many occasions when I was in the earthmoving business.

The reality is that quick action by the government on this occasion was appropriate, but it did not load future generations with a potential debt. In racing terms, it was a pretty good bet. The member for Corio, who has now left the chamber, made two remarks that I thought were interesting, considering my wider view of the future of the motor car industry and, more particularly, vehicle manufacturing in Australia. He talked about the industry doing it tough. Significantly and more particularly, whilst Australian manufactured vehicles are primarily sold into the fleet market, that is an area where suddenly businesses are saying: ‘Yes, things are tough. We’ll extend the useful life of vehicles we have’—under whatever arrangement. So there are fewer sales occurring. The member for Corio also talked about a double blow. To the government’s credit, there was no double blow in the availability of finance in this particular sector.

In the much publicised debate on emissions trading schemes that we listened to yesterday it was pointed out that the Obama administration has now managed to get some terms of reference—if you like, a draft bill—through its own party structures, which are much more flexible and fluid in America compared with the discipline that applies to major parties in this country. They have put through a set of issues that will eventually be debated in congress. That probably will be made even more generous to the manufacturing sector in that country but, as it exists, a trade exposed industry—and for the purposes of this debate read ‘car manufacturing’—will get a 100 per cent exemption. All such trade exposed industries under the bill at its present level of generosity will get that particular exemption. Under the draft bill, they will also have it for about three or four times longer than is proposed under the legislation introduced into this place.

One only has to look at the fact that, with billions of dollars of taxpayers’ money, the major American owned manufacturers are being restructured, and under those arrangements it is patently obvious that some of the huge cost burdens they have carried—for instance, their health funds, which I have read previously cost about US$1,500 a motor car—are to be restructured. There are discussions about how that is happening and one proposal might be that a union health fund gets a lot of shares and will then rely on the profitability of the company to fund the health services of their members. Nevertheless, the cost of building motor vehicles in the US is going to fall.

As the wider implications for these companies—like GM, which it appears is going to sell its German manufacturing arm, Opel, as part of its restructure—become known, the question in the boardrooms in Detroit is going to be about this. ‘We are now restructured and we now make vehicles cheaper, and the more we can sell anywhere in the world, the cheaper they will get,’ they will say. What is more, it has always been the case in the motor car industry that the price has been relevant to the local preparedness to pay, and the profits have been averaged across different markets. So the board members over there are saying: ‘Things are starting to look pretty good. Furthermore, those dopey cows down in Australia have decided to increase the operating cost of General Motors Holden. We can export our cars over there to the advantage of our business here in Detroit and sell them much more competitively than trying to continue to make them in Australia.’

Now what does that mean? What if the board of Ford are coming to the same conclusion? Then there is whatever state Chrysler might be in and whether it is going to be Fiat or whatever. I do not know how other people are experiencing their driving at present but I keep noticing more and more American built Jeeps on the roads of Perth. They are fully built up vehicles coming from somewhere else and competing, I would imagine, with the Ford Territory. Recently they have put out these ‘You can do it’ TV ads, where they are cutting the prices of all of those vehicles and making them extremely competitive. So what is going to happen? A doing-it-tough double blow.

The second component of the double blow has been removed by this legislation, and I welcome it. But there is another time bomb sitting there for the Australian manufacturing industry. Of course we now acknowledge that the Chinese have outgrown tin cans and—this was pointed out to me the other day—where once they were the great international patent infringers of the world, they are now actually having court cases within their own country protecting patent rights. They have proved in so many ways that they just get better at things. I do not care what happens at Copenhagen, but I know they will not penalise their trade exposed industries.

Considering my interest in a renewable solution to emissions and in light of the great job opportunities that that would generate as well as, to my mind, cheaper electricity—and I might come back to this in a minute—I have read with great interest that they have gone out into the desert on the Silk Road, where the wind has blown sand into people’s eyes for centuries, to harvest the wind. They are currently building the longest high-voltage DC line in the world—2,000 kilometres long—so they can better transfer electricity with the minimum loss of energy. It is a 6.6-gigawatt capacity line. That is pretty big. It is twice the generating capacity, by the same measurement, of all Western Australia—and they are building it now. Why are they building it? So that their manufacturing sector on the east coast can have green power from their huge hydro resources and these wind and other resources. So, whilst they might go along to Copenhagen and accept some targets, they are not going to do it at the cost of their industry.

Some will hoo-ha this little lecture that I am giving to the House—typically, there are not many around to listen to it—but I have a very funny feeling that I will be very sadly saying, ‘I told you so’—as I have done on other occasions with speeches made in this place—when all these circumstances come together and the owners of General Motors Holden and Ford Australia and probably Toyota too say, ‘Sorry, we’ve got this ultracheap means of transporting fully built up cars around Australia’—you only have to see those huge ships coming in now—’so we’re not going to manufacture in Australia.’ Mitsubishi have made that decision and Nissan made it years ago. The GMs and all those are going to have a tough enough time anyway, and I want to talk a little bit about that on the other side of the ledger. Those companies face extinction if one additional ounce of burden is placed upon them, and let us hope their unions do not go silly under the laws that will come in in a month or so.

I have written to the Secretary of the AWMU drawing this matter to his attention, and not in a dog-in-the-manger way but enclosing what I have been promoting—which I could never get into the head of John Howard, I have to say—as the solution to the climate change issue without destroying the economy. I will be interested to know if this fellow has real concern for his workforce, which totals about 40,000 or 50,000 Australians who are involved just in the vehicle manufacturing sector, to say nothing of the retail sector, which this legislation has a lot to say about and who number even more, although they will survive. They will still be here and they will be okay, because they will be selling fully built up American motor cars. People will still buy them and they are going to be better and cheaper—their price will line up with that of the Chinese. It is going to be tough anyway, but why would this parliament be contemplating a set of rules when the simple solution for those most affected is to pack up and go somewhere where there is a better deal, at whatever level that might be?

I just cannot believe the carpetbaggers at the Business Council, who only see the opportunity to have a new derivative so they can trade in fresh air. They say, ‘We want certainty.’ I know what ‘certainty’ is. They want to know whether they are going to leave town or not. It is not: ‘Once we have the certainty we will go back to our shareholders in this economic climate and ask them for a few more billion dollars so we can reconstruct our industries.’ No, they will just run them down, and they will otherwise start investing overseas.

It gets pretty dreadful, because we have very few other problems in Australia like what I call Kakadon’t. Some of you may have read the article in the Australian about Kakadu: is it Kakadu or Kakadon’t? The journalist came down on the side of Kakadon’t. That is a disease throughout Australia. It was a challenge that we failed. It is a challenge I hope the Western Australian government is going to do something about, and we got a little bit of encouragement the other day that we are actually going to get an LNG plant in the Pilbara. But here we are with this government still sneaking along under the minister for the environment, still holding a heritage inquiry into 6,000 kilometres of rock and sand called the Kimberley, which includes the occasional waterfall. And there sits an energy generation capacity equal to all the energy consumed in Australia.

Now we have another option. Instead of pumping gas down pipelines—and the existing pipeline between the Pilbara and Perth consumes 250 megawatts of energy in pumping the gas, with 700,000 tonnes of emissions—the first thing we should be doing now in meeting the additional power supplies of Perth and the nation is generating gas energy in the Pilbara for the use of the Pilbara and for transmission with high-voltage DC to the Western Australian grid and onwards to South Australia and the rest of Australia. People talked—Rex Connor and others—of putting a pipeline across the middle of Australia. Much better: just send the electricity. But, having done that and extending that to the LNG place at James Price Point, you are on the doorstep of the tidal region, and then it is attractive for some investor to do it. I just want to say that this car industry is under dreadful threat—a double blow, according to the member for Corio—because of other legislation in this place that probably will not work and that is the wrong solution.

I want to make another point in the few minutes I have left to speak tonight. I took an immediate positive view to the GM crash. One of their announcements was: ‘We’re going to drop Pontiac.’ One of their major Pontiac brands happens to be made in Australia—over here it was known as the Camaro. More particularly, and I drive one, there is the six-litre SS V8. In writing to the chief executive of GMH, I told him what a good motor car it was. I listed myself as some sort of expert, having once owned a Delahaye, once smashed up a Lamborghini, driven just about every imported American car from time to time—and I forgot to tell him I had also had a Jaguar and a Mercedes. I think I am some sort of judge and I think that car stands up very well in that company. I said to him: ‘What are we going to do? Are we just going to cop it, or do you write to GM in Detroit and say: “Send the Pontiac brand name out to Australia. If you don’t want to retail our cars, we’ll sell them on the internet.”‘ That sounds funny and silly, doesn’t it? But tell that to Dell, and tell it to the people who sell their second-hand vehicles on the internet. When you start talking about maintenance and all of that, in my state we have a crowd called Auto Masters. They are a chain, a franchise, of repairmen. I do not know if they are in other states, or how many there would be in America.

If you can escape the ETS, there are opportunities for Australia’s manufacturers to become niche marketers with special vehicles. Yes, they use a bit more petrol, but some people want them, and rear-wheel drive is another factor. That is my proposition of a positive nature. All that, of course, disappears if the ETS drives these companies back to their base in America and these other places. I just think that is so important. You do not need finance for motor cars you do not make. There is a real challenge there. I appreciate that the father-in-law of the Parliamentary Secretary for Regional Development and Northern Australia, who is sitting at the table, would be cheering with every word I am saying. He has this funny belief that, in the Labor Party, jobs for workers come first, and he and I took a strong view in that regard in protecting forest workers’ jobs. We lost the jobs, and we lost 170 lives recently because of their absence from the forests, which is another tragedy. Anyway, my best wishes to your father-in-law. (Time expired)

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

The Australian automotive industry plays a critical role in the Australian economy. It provides many thousands of jobs and generates a great deal of income from exports. It is a major investor in R&D, and its activities have extensive linkages to other sectors of the community. It is for these reasons that I rise today to support the Car Dealership Financing Guarantee Appropriation Bill 2009.

The OzCar special purpose vehicle initiative is designed to provide crucial wholesale floor plan finance to eligible car dealerships to ensure that the departure of GE Money Motor Solutions and GMAC and the liquidity challenges Ford Credit currently faces do not result in the closure of hundreds of otherwise viable car dealers across the nation, which would result in the loss of many thousands of jobs. This initiative was put in place by this government to stabilise that part of the industry.

The special purpose vehicle initiative will protect jobs across the Australian car industry, and it will certainly have an impact in local communities in these very challenging times—and earlier in the debate we heard the member for Corio speak about the experience in his electorate, which is centred on Geelong. As I said, vibrant and viable car dealerships are critical to this industry. The measures put forward in this bill are essential to minimise the adverse impact on the car industry and many regional communities as a result of the serious liquidity pressures confronting various finance providers, which has resulted in the exit of the two largest financiers in the motor vehicle finance industry. We know that car dealerships generally cannot remain in business without a viable floor plan financing arrangement. This is not a plan for retail businesses; this is not some form of guarantee that allows people to expand their businesses. This plan allows car dealers to guarantee their floor plan in terms of the wholesaling of vehicles to ensure that they are in a position to be able to locally market vehicles and distribute them to customers.

Today I have taken the opportunity to talk to a number of the vehicle dealerships in my area—as I am sure a lot of the members participating in the discussion on this bill will have done. I have spoken to small, medium and large dealers, some of whom have been in my area for 20 years or more. These include Clintons, the Paul Wakeling Motor Group, McGraths at Liverpool and Peter Warren at Liverpool, which also owns Macarthur Ford. These are all significant businesses in Campbelltown and Liverpool. These local dealerships across my electorate employ many hundreds of local people, if not more, in their workshops and as salespeople and as marketing people. They also contribute a lot to my community. On many occasions I have spoken in this place about what a number of these people contribute to organisations such as Lifeline, Kids for Macarthur and Macarthur Disability Services—and others have contributed to the local football club, Wests Tigers, of which we are truly proud.

These car dealerships have a central focus on the areas that they service. They are not just the people you go to every time you are fortunate enough to be in a position to get a new vehicle; they are people you see contributing positively to the community they serve. These people help us to change and improve the lives of many people in our community, some of whom have been dealt a not very positive hand in life. The people who work for and own these dealerships have made significant contributions and continue to do so.

On a personal note, I value the contribution that vehicle dealerships make to my community—and, like many members on this side of the House, I have taken the time to speak about their contributions. In my discussions with dealers today, I found them very optimistic about the actions taken by this government in relation to securing the viability of the Australian automotive industry. Some of them are potentially exposed to risk following the withdrawal of the two largest automotive financiers. The government has been working with the four leading Australian banks—ANZ Bank, Commonwealth Bank, National Australia Bank and Westpac—as well as various other financiers to put in place an arrangement that can provide critical wholesale floor plan finance to those eligible car dealers who have been left stranded as a result of the exit from the Australian market of GE Money Motor Solutions and GMAC.

Although the market has responded very positively since January 2009, with a very large proportion of former GE and GMAC sponsored dealerships securing finance through other providers, there are still some dealerships that will need to rely on the special purpose vehicle—including those from Ford Credit—over the next 12 months to remain in business. A key role of the Australian government is to provide a Commonwealth guarantee on certain securities issued by the special purpose vehicle that were initially risk rated at below AAA. The Commonwealth’s guarantee will ensure that those securities are rated AAA, thereby allowing the four participating banks to buy them and contribute liquidity to the special purpose vehicle, which will then be lent to eligible car dealers.

The eligible car dealerships under this scheme are those which have been financed by GE Money Motor Solutions and GMAC or which are currently funded by Ford Credit. The OzCar SPV is a short-term arrangement, designed to reach fruition in 12 months. It is designed to address the critical market failures now. If left unaddressed, those failures have the very real potential to cripple our industry. I want to make it abundantly clear that the special purpose vehicle will only provide finance to wholesale floor plans. As I said a little earlier, it is not there to provide liquidity for retail lending.

I mentioned earlier the positive comments from the local dealers I had the opportunity of telephoning today. They are also echoed by the Executive Director of the Motor Trades Association of Australia. The media statement issued by Michael Delaney, the head of the association, on 5 December 2008 thanks the Australian government on the announcement of establishing this special purpose vehicle and states:

Absent these measures we believed and were able to document to Government that Australia would have lost five hundred car dealers from its near to 1,500 new car franchised dealers, with 3,500 outlets, would have lost up to 75,000 jobs and would have seen most all of the present stock of motor vehicles fire-saled through liquidations at anything up to below 50 percent of the list price. That would have wiped-out the valuations of all new and used cars, for all persons and parties holding a motor vehicle as an asset and in many cases could have caused a cascading call for more security from the financiers of those parties.

That is certainly an endorsement from the Motor Trades Association of Australia. This guarantee that the Australian government has made will hopefully not be called upon. Hopefully people are able to continue their trade. But they can now do so in the confidence that this vehicle is there to assist in that regard. As I indicated, whilst I may not have a motor vehicle manufacturer in my area, as has the member for Corio or my colleagues from South Australia who are also more than well aware of the significance of the manufacturing of motor vehicles in their state, I certainly see and value the contribution that the motor vehicle dealerships have made to my local community in Werriwa. I see and value the amount of time, effort and money they put into the training and development of staff and the overall contributions they make through being good corporate citizens throughout many of our regions. I commend the bill to the House.

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

I rise to set the scene on the Car Dealership Financing Guarantee Appropriation Bill 2009. On the surface it seems to be something that is going to provide significant support and is going to get a lot of our dealerships out of trouble. Sadly, the case in rural and regional Australia is that this is not happening. I will set the scene with my email to the Department of the Treasury on 20 March wherein I say:

We have a crisis in car dealer finance for many dealers covering around 80-90 dealers in NSW as determined by the NSW MTA. It appears that there is no finance for these dealers as a result of GM removing their finance. The dealers have been working with MTA to try to get other finance options through St George and Esanda, however the dealers have now been told by Esanda that the applications that have been put to the finance companies particularly from marginal rural and regional dealers as a result of the ongoing drought, have not been approved because the Special Purpose Fund appears not to be operating. The real crisis I have is one dealer at the moment in one of my communities who has been in a family business for 100 years and who has been dramatically affected by the drought period so much so that he has qualified under the drought program. He is at this moment in Sydney trying to get some help but to no avail. He cannot sell cars because the banks are not wanting to fund the sales or the floor plan, that means that the 10 full time jobs will go as early as the end of this month. He has been battling with this since GM removed finance.

I go on to say:

I have spoken this morning with an officer in your office and explained the urgency of this issue. I would so appreciate some assistance in someone ringing the dealer to guide him through the options that he may not know about as per my discussion with the officer in your office.

Sadly, most of the finance companies seemed to be saying to the dealers across my electorate that the special purpose fund, about which we are speaking this evening, was certainly not operational. It was not about what you knew or how you presented yourself as to whether or not you would be able to get access to this fund. It was almost about who you knew.

Let me remind the House that the bill was:

… limited to guaranteeing securities that the OzCar Trust facility issues which are risk rated below ‘AAA’ by Standard & Poors.

It appropriates funds to enable claims to be paid under the Deed of Guarantee in respect of the Australian Government Guarantee to support interim funding to car dealerships, executed on behalf of the Commonwealth on 23 December 2008.

The Bill provides an appropriation for the purpose of paying any claims pursuant to the Deed of Guarantee.

The appropriation is not subject to a specific monetary limit.

The overall contingent liability for the Australian Government is estimated to be around $550 million comprising around 45 percent of the remaining GE and GMAC loan books and 85 per cent of the Ford Credit loan book.

Under the Dealer Eligibility Criteria the SPV will only be able to advance funds if it is satisfied that the dealership is not subject to any insolvency event.

So that was the bill as we saw it last year.

Then came the email that I sent off to Treasury, saying: ‘I have a crisis. I’ve been told that this fund is available. I have information from the government that says this special purpose fund is operational. Yet the people that I represent are being told by the finance companies, “Sorry about that.” We are not getting any money out of that fund; it is not operational.’

Can I explain to the House the current financial situation of regional towns, particularly in the electorate of Riverina. Apart from the city of Wagga Wagga, the economies of all towns and villages in my electorate of Riverina are underpinned by agriculture, or value-added industry resulting and arising from agriculture. Agriculture has an overriding hand in the make-up of all of my regional communities. Many facets of these towns are either indirectly affected by, or can be solely attributed to, the state of our local agriculture and climatic conditions—currently, drought. Some of these faces are, for example, the sociodemographics, consumer confidence and population changes. For the past seven years—continuing to this very day—when we have had floods and heavy rains in most areas across Australia, the electorate of Riverina has received no reprieve from the drought. It is still the most amazingly drought-stricken area that one could see. Just this weekend, when I was out in my electorate, I was confronted by a dust storm that was almost interminable, maybe 200 feet high, rolling across every town and community. That is the kind of environment that we are experiencing at the moment.

A downturn in the economy is nothing new for many of the towns and villages in my electorate. The continuing drought had already shaken our consumer confidence well before the financial crisis hit. As I said, my electorate experienced seven years of ongoing drought before this global financial crisis. They were hurting big time. The employers in all of the towns across my electorate are brave and absolutely stoic people and have continued to employ their employees regardless. It is the employers’ homes that are mortgaged. It is the employers that go home late at night and cannot sleep because all of their material possessions are on the line. And they still guarantee the employment of people in their local communities.

We already had this major drought problem when the luxury vehicle tax was introduced by this government. That was supposed to pin down and target those great big rich people in the community with luxury cars. It actually also targeted those car dealers who required four-wheel drives, which came in under luxury car tax, to make a living. Rather than those exclusive dealers that you see on many of the roads in Sydney, who provide Porsches, Mercs and a million other luxury cars, it was the dealers in rural and regional Australia, particularly in my electorate of Riverina, that were hit hard by that luxury car tax and by having the price of their vehicles rise as well. Those very dealers underpin employment in most of the towns across my electorate, providing a large amount of employment. So the car dealers had gone through seven difficult years of drought, then they were hit by the luxury car tax, and then along came the economic crisis. They are in enormously difficult circumstances. We thought we had a crisis before—we haven’t seen anything yet.

The impact on our economy and our regional businesses, primarily these car dealerships, was absolutely extraordinary. They were being kicked when they were already down. In one of the towns in my electorate, a locally owned car dealership actually qualified under the drought program for drought support assistance. This shows the impact that the drought was already having on our local car dealerships, without even factoring in the global financial crisis.

The withdrawal of finance by GE Money Motor Solutions and GMAC was, in simple terms, the last straw for many of those dealerships in my electorate. The coalition, particularly me, were very disappointed in the government’s inability to address the serious problems that the car industry was, and still is, experiencing. We have this bill, but, seriously, it is not working for many of the people who desperately require assistance. It has already been exacerbated by the now infamous unlimited bank guarantee.

Prior to the government’s announcement in December, the coalition had called on the government to provide urgent support to car dealerships right around the country. I was one of the people calling for assistance, not for the big manufacturing industries out there with multitudes of employees under the one roof but for the multiple employers right across Australia that desperately required that assistance and support. I was very happy to see this particular program put in place because I believed it was the answer we required. But, as I have mentioned, it did not come to fruition.

I have maintained the links with my communities and I understand what is happening on the ground. The message coming from car dealerships is, simply, ‘Help!’ There is a strong cry for help, at this very moment, on this very day. Today my office has spoken with an owner-operator of a car dealership in my electorate. That owner-operator has explained his circumstances to us. From 2004-05 to 2009 their sales have dropped by 60 per cent. They had 19 staff members in 2004; they have eight currently. They believe this is a consequence of the drought and, in their opinion, it is significantly associated with and underpinned by the financial crisis. His business has no debt—it owns the building, it owns all of the cars and it has substantial savings, so it is not at risk of going bankrupt. Since GMAC withdrew, this businessman has not been able to get anyone to take his business on. Esanda, St George and Capital Finance have all rejected his claim. Capital Finance said that he did not meet the criteria and that his business could not give them enough retail paper. The reason was that his business was too far out, too small—they were not interested. He could only supply them with half a million dollars in contracts per year. They wanted half a million dollars per month, in our drought stricken region. Esanda and St George gave similar rejections. This person has been financing the sales himself. He believes the SPV does not work.

I make this appeal to the government because I think the intentions of the government may have been very honourable. I think the intentions of the government were very good. There is a lot of material that precedes the Car Dealership Financing Guarantee Appropriation Bill 2009. There are a lot of explanatory notes and deeds of guarantees. There are quite a lot of hurdles and challenges that have to be met—major dramas that have to be overcome. The legal and contractual arrangements that underpin this bill are very technical. The government does not pay out any money; it kind of just gives guarantee support of moneys to be paid out. I am wondering just how much of the available funds is actually being accessed. It would be great to know just how much of those available funds is going out to these dealers who are in crisis.

Seriously, they want us to write half a million dollars of contracts per month in rural communities! This particular business underpins probably one of the largest employers in the community. Generally, how these guys work is that a dealer with a dealership in a given community goes out and takes a dealership in another community and provides employment in other local communities, where it is very difficult to get employment.

I remember my conversations and the absolute crisis calls that I spoke about in the beginning of my speech. When I banged that email out to Treasury I was saying: there is a crisis here. I had a another guy on the phone from the streets in Sydney, desperately trying to save the employment of 10 staff members, in a business that has been in the family for 100 years. He was not a Johnny-come-lately, fly-by-nighter, not a person who does not understand business structure or the way in which business works—this family had been in business for 100 years. The business was an institution and was employing 10 people in full-time jobs at the time. This was the other man I was referring to in this community, with his dealership, back in March when I sent this emergency email. I think it has to be recognised that there has been some slowness, some reticence, some lack of interest in ensuring that those people in rural and regional Australia are entitled to get some support as well. Those people in drought affected communities are entitled to maybe have just a little bit of leniency on these criteria.

As I have explained, the person that we spoke to today is not going bankrupt—he owns his building, he owns his stock, he has eight staff members still employed out of the 19 that he did have employed. But he is too small. I would urge that the government consider and understand this issue and move to address it, because it is simply unjust, unfair and quite discriminatory. I am sure that there was not an understanding of these types of issues when this scheme was first put together. It would be great if the Prime Minister and the Treasurer could see their way clear to change some of these criteria to give those people a break, those people who are still employing people, who still have their houses mortgaged in most cases and who are doing it tough but are still committed to jobs. I understood that that was what we were all about in responding to this financial crisis: retaining jobs, jobs, jobs. These people are retaining jobs, jobs, jobs; but they are retaining them without the assistance of this program.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

The Rudd government has real cred when it comes to supporting Australian small businesses in these most difficult of economic times. Every right-minded MP in this House would support our budget initiatives to bolster business, support the economy and protect jobs—measures like the 50 per cent tax break for eligible assets; $10 million to help small business go online; R&D tax credits for small- and mid-sized businesses; changes to PAYG instalments to ensure better cash-flow for small business; and, of course, the stimulus payments we delivered to millions of Australians which then flowed directly to the retail and service sectors. These are practical initiatives that are helping sustain Australian businesses and support Australian jobs.

It is in this same spirit that I rise to support the Car Dealership Financing Guarantee Appropriation Bill 2009, Mr Deputy Speaker Andrews, and I do so knowing your background. It is a bit strange for me—a lawyer turned politician—to be talking about used car dealers. I think of when they do those rankings of professions, in terms of how people are trusted, if we look at politicians, lawyers and car dealers, I think that is about the rolled gold trifecta at the bottom. Perhaps if I threw in a journalist it would be a slam misere.

Leaving that aside, obviously the Australian motor vehicle industry is a very important industry. It employs around 66,000 Australians. It generates billions of dollars in exports and is a crucial partner for many other industries. I see it nearly every day when I go home and I drive past the facade of motor vehicle retailers at the Moorooka magic mile. I look beyond all of them and I see all of these other industries—a plethora of motor vehicle support businesses. Where I live is just around the corner from the Moorooka magic mile of motors. This iconic strip of car sales businesses on Ipswich Road is well-known in Brisbane, and perhaps all over Queensland and even Northern New South Wales. I would suggest that the Moorooka magic mile is Australia’s most famous car sales precinct and the best.

If you ask any of the retailers along that strip they will tell you it is home to Australia’s largest range of new and used vehicles—businesses like Brisbane Proton, Barton’s Holden, Just Nice Cars, Moorooka Nissan and Hyundai, Motorama Auto Superstore, Motorama Mitsubishi, Motorama Toyota, QLD 4WD Sales, Salters of Moorooka, Westpoint Autos, Rod’s Public Wholesale, XCarz and Kar King, to name but a few. And then there are all those other car support companies that I mentioned earlier. All of these motor vehicle businesses—some big, some small—help stimulate jobs and trade in my electorate.

Unfortunately, as some of the earlier speakers have mentioned, Australian car dealerships have suffered collateral damage due to the global economic crisis. The pressure on global credit markets—and consequently our own domestic credit markets—has seen two motor finance companies, GE Money Motor Solutions and GMAC, leave the market and another, Ford Credit, endure extreme pressure. Without finance to get vehicles on the showroom floor, most car dealerships simply cannot remain in business.

The latest sale figures give us a grim picture of the impact of the global downturn on our local car industry. The Federal Chamber of Automotive Industries reported 64,000 new car sales in April 2009, down from 84,000 in April 2008. That is a slump of 23.8 per cent. The impact is even more severe for luxury cars, which saw a 40 per cent drop in sales in April, year on year.

This morning I spoke to Alex Salter from Salters of Moorooka. Salters of Moorooka is a well-known used car dealer that has been selling used cars on the magic mile for 34 years. Alex is a very experienced and well-respected operator, and he said that his profits are down around 40 per cent. He only sells used cars and uses his own stock, so he has not been as affected as much as the dealers that sell new cars that have had some of the finance problems. But he did assure me that the global recession has seriously affected a lot of other dealers that he is in communication with. Thankfully, for me, there is still a lot of magic left in my magic mile, but there are other MPs who could not say the same thing.

This morning I also spoke to someone that you might know, Deputy Speaker, Ross Tait, who runs not only Ballina Toyota but also Ross Tait Toyota out in St George. I have known him for a long time and, as this legislation will benefit all of the electorates in Australia, I thought it would be appropriate to seek some background from a regional retailer, not just someone blessed enough to be on the Moorooka magic mile or in my electorate. I cannot really speak for Ballina because I do not know that part of the world, but I do know the bush around St George very well and it is probably the same as many other National Party electorates—or even Labor Party electorates like Leichhardt, Flynn, Capricornia or maybe even Blair.

Ross Tait, from Ross Tait Toyota, told me that most of the dealers he knows have been really struggling for the last 12 months. However, he also said—and this is very important—that sales have doubled since the Rudd government’s economic stimulus strategy came into play. Prior to our economic stimulus strategy, which many people in the House voted against, Ross had not had to lay anybody off. Unlike the previous speaker, he has been able to keep everybody because he said they were too hard to get in the bush and so he was trying to hold onto them. However, such tough decisions were on the horizon until things started to change a few weeks ago. He said the last six weeks had been particularly positive and he wanted me to thank Kevin Rudd personally on his behalf. So thank you, Prime Minister.

Today when I was talking to Ross Tait I had to interrupt the phone call to run down here to the chamber because some people in the House were playing silly buggers with quorums. In the time that I was away from that phone call, which was only about 15 minutes, in that time Ross Tait made a vehicle sale to a small business man. It was to a bloke called Peter Haslem of Haslem Agriculture, which I understand is a bug-checking business. Peter Haslem told Ross that he wanted me to know that he would not have bought the vehicle but for the Rudd government’s tax breaks for small businesses. So thank you, Treasurer, and thank you, Prime Minister. The people from the bush thank you.

When the market fails that is what good government does. Responsible governments step in. And that is what the Rudd government is doing. Obviously, the last thing we want to see is the closure of otherwise viable car dealerships. It would not only be bad for those businesses and their employees; it is also bad for consumers and would impact on other areas of the economy—especially in rural communities, as the previous speaker noted. This bill before the House will breathe life back into Australian car dealerships by ensuring there is finance available for those who need it.

At the end of 2008, the Treasurer announced the creation of the OzCar special purpose vehicle to provide finance to eligible car dealerships. For those people that have just begun listening, I should clarify that the OzCar special purpose vehicle is not some sort of Aston Martin that Q supplies to James Bond. It is not that sort of vehicle. It is obviously a financial vehicle. The SPV will raise funds by selling securities to the four major banks, which will then lend those funds to car dealerships. These funds will be available to dealerships that had been financed by GE Money Motor Solutions or GMAC or who are currently financed by Ford Credit.

This bill introduces a guarantee to ensure that securities issued by the SPV that would be rated below AAA are in fact rated AAA. In other words, the Commonwealth government will take on the credit risk to ensure that car dealers can access finance to keep cars in their showrooms and car yards. OzCar will provide loans up until 30 June 2010.

This is not a free-for-all; it is a sensible response to the market failure. SPV finance is available for the wholesale purchase of vehicles. It is not available as finance for retail lending as there are many other lending options still available to consumers. Dealerships will need to prove that they have a viable business case and an ability to repay the loan—that is of course prudent as we are talking about a possible call on the public purse—and I understand that auditors will monitor stock management of dealers accessing SPV finance.

There will be no fee for the guarantee as we do not want to see extra costs passed on to consumers. The guarantee is there to stimulate liquidity in the market but of course, ideally, the guarantee will never be called upon. Nevertheless, this is good policy.

As I said from the outset, this bill is about providing a buffer for businesses and jobs and ensuring that our car industry can ride out the credit crunch and the economic slowdown. We need to ensure that there is still sparkle and magic at the ‘Moorooka magic mile’ and all similar places. I commend the bill to the House.

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Sustainable Development and Cities) Share this | Link to this | Hansard source

I listened with interest to the speakers’ contributions to the Car Dealership Financing Guarantee Appropriation Bill 2009 and I recall how well advocates are able to leave out important parts of the story as they extol the virtue of something before this House. This bill amounts to a soccer player or footballer, who has scored an own goal and is facing the relegation of their team, working hard to at least assist someone else in scoring a goal for their team so that they are not relegated. That is what is happening here.

What occurred with the poor overreach by the Rudd government in the way it handled the bank guarantee issue was that it dried up non-primary bank funding sources for so many other areas of enterprise in our economy. One of them was new car dealerships. The Prime Minister did not follow the wise advice and the considered proposals of the opposition for a limited and targeted guarantee and instead guaranteed everything in the hands of our major banks. This meant that anyone else who was in the lending game and trying to attract deposits to support their loan book was left out in the cold. It was the Rudd government’s own goal that put the Australian economy—in this case the new car industry—behind the mark and facing relegation.

The Rudd government subsequently recognised its error in its intervention in the financing markets and tried to at least pass the ball in an assist to the car industry so that the car industry can assist itself to score a goal and avoid relegation and get back into the game. That is what this bill is about. It is an assist after an own goal.

The bill specifically tries to provide a facility for financing motor vehicles on the floor of new car dealer showrooms where they are used to show the range of vehicles that are available, hopefully, to tantalise consumers and enable dealers to get on with selling cars and supporting the car industry and all those involved in servicing and maintaining vehicles and in the retail and wholesale improvement and after-market management of our vehicle fleet.

This bill does that by putting a standing appropriation in place that enables claims to be paid under a deed of guarantee. The deed will see the major banks bring together the finance and then make it available for funding of car dealerships. This deed was executed by the Commonwealth with the banks in December 2008. The execution of the deed occurred some weeks after the 5 December 2008 announcement by the Treasurer that, in order to compensate for the own goal and the very damaging impact of the poor management of the banking guarantee by the Rudd government, this special purpose vehicle funding instrument would be available through Australia’s big four banks to provide liquidity to eligible car dealers who were left without financing because their traditional finance providers had been frozen out of the marketplace. These finance providers were finding it very difficult to attract the funds so that they could offer that financing because they, unlike the big banks, were not included in the bank deposits guarantee that the Rudd government put in place.

So you can see the course of events: an overreach by an inexperienced government—Prime Minister Rudd is not known for his economic literacy and certainly does not seem to have sound and grounded economic principles that he sticks with—to almost a one-upmanship on what the opposition had put forward, and a lack of understanding of how that action would reverberate through the finance sector. And here we are today discussing a remedy to that own goal, which we hope will assist the car industry.

Those actions and the inability of other non-guaranteed deposit takers to then provide finance facilities for activities like the new car industry are the reasons that we are here today. The two main companies, GE Money Motor Solutions—which is a subsidiary of GE Money, which is in turn a division of GE Capital, which is one of the four main businesses of General Electric—and GMAC Australia Ltd, and, more recently, Ford Credit, are feeling the consequences of the Rudd government’s overreach on bank deposits.

The circumstances that arose were very vivid in my electorate. As the member for Moreton and the member for Riverina commented, it certainly reverberated through an important part of our local economy. The selling, reselling, servicing, improvement and after-market enhancement of motor vehicles and vehicle LPG conversions are all very important parts of the local economy and are major employers. When new car dealers could not afford to maintain their floor stock it had profound implications for employment and economic activity in my electorate. Down Wells Road, the Nepean Highway and other areas where there is a congregation of car dealers you saw large areas of pavement with no vehicles on them. To try to get through the storm that had been created by the Rudd government they downsized the amount of floor stock they held.

What that meant was, clearly, the floor stock that was put to the marketplace was not the best they had available, and some of the costs in that floor stock were proving very difficult for businesses to accommodate. What happened prior to the need for this bill was that new car dealers effectively leased display stock off these financing companies and through those leasing payments paid for the availability of those vehicles. When they were purchased, that sale put in train the full payment for that vehicle and so on. Without having that leasing of the floor stock facility available, you could imagine, less stock was on the floor. What that meant, though, was that dealers then scrambled to try and find financing options to maintain their floor stock under quite different terms and conditions.

I mentioned earlier that this announcement was made on 5 December 2008. It is now 27 May 2009. It was characterised as an emergency intervention back in December, and here we are discussing it now. It was characterised as an emergency intervention that had a shelf life of 12 months, and here we are almost half the way through that period debating it in the parliament. It will probably be well over half that emergency period before it actually is passed through both houses of this parliament. What has happened in the meantime is that the resourcefulness and the resilience of the car industry and the dealers, in particular, have been tested. I have had dealers explain to me how others have come forward to offer them financing as long as they provided security over personal assets, their firstborn and even family pets—slight exaggeration. The point I am making is that a leasing arrangement for the floor stock has then become a very large financial burden around the necks of individual proprietors as they have sought to show those who have moved into the void after GMAC and GE Money had moved.

As they sought to fill that void, new lenders came in and were asking very viable, long-established, successful and profitable businesses, some of quite significant scale with multiple outlets and servicing activities and integrated motor vehicle enterprises—these were not little shows; these were big shows—to find in some cases seven-digit sums of money themselves to provide as security for the floor stock. These things do not happen overnight. You found proprietors having to reorganise their personal affairs, to take out mortgages or second mortgages on some of their personal assets, including their homes, to look at the way they could bring that kind of capital to the table as security so that they could get financing made all the more difficult and all the more expensive because of the way the Rudd government mishandled the bank guarantee. And they were told to do it quickly. Some that I have spoken to said: ‘Yes, we have discussed it within our group and amongst our principals and our families, and we believe we can do all of that. We can bring together that capital.’ In some cases it was 40 per cent of the value of the floor stock. This was not a small amount of money. They had agreed that they would go down that pathway, so confident were they about the future of their business and the prospects of the new car industry. But that takes time. Anybody who knows anything about the way businesses operate and the interplay between the business assets and the personal assets knows that if you bring personal assets in to secure finance for the business there is a fair amount of work. I suppose that is work generated for the accountancy sector, in getting tax advice and all those things. It does not happen overnight.

So I was getting phone calls about what had been covered in the media. What had been covered in the media was the announcement of this ACSA, this financing vehicle, and how it was going to be their salvation. Even those in the industry did not quite know how they were going to access it. Up until last month nobody had accessed this. Up until last month some people offering finance to dealers that were having trouble coming up with this huge chunk of security had not even registered to participate. So we had the announcement but not the actual machinery. In the meantime, since December 2008 until now—and I would imagine we will see it for some weeks to come—you have seen an almost stealth like rationalisation of the industry where atrophy is being used by some with motives that are unclear to thin out the number of participants in the industry because the finance that was there, that helped them build their businesses and be successful employers, was changed and compromised by the mishandling of the bank guarantee by the Rudd government.

So I am pleased this bill is here. Many of the car dealers in my electorate would not be happy with me if I did not ask the question: where has it been? Those car dealers who have had to substantially rearrange their personal affairs to bring together in some cases seven digits plus of personal assets and wealth to secure a line of credit would wonder, ‘Where has this vehicle been?’ And we should spare a thought for those that in the interim between the big announcement and now are no longer in the business. We had the announcement but where was the machinery? I hope this works and I hope it provides some support for the dealers who have been left out in the cold by a problem not of their making, a poor handling of the bank guarantee by the Rudd government that compromised the funding streams on which they built successful businesses, in some cases for decades. It is a problem not of their making, but they have been left out in the cold. Here we are on a cold night, just about in winter in Canberra, talking about something that has left them very cold for nearly half the year. I hope this gets rolled out and is made available soon. I hope the terms and conditions that accompany accessing this vehicle are not so punishing and so punitive, like the examples that have been brought to my attention where this becomes a policy action in name only and not a policy action that is offering help. I hope it does offer help, because these people in the industry need that help.

We have seen examples of what has been happening in sales trends and the like. That is worrying. I remember in the Howard government years when we had a million vehicles sold in a year. I hear many businesses saying: ‘Please, can we have that again. We will make very good use of those positive times.’ But there is a reduction in activity in the industry and this has just been an own goal made by the Rudd government that has made the situation even more difficult.

But it is not the only challenge. I was meeting with some of the leading people in the LPG conversion industry that operate out of the Dunkley electorate. They are very talented, very forward looking. They were pleased when the budget was announced that despite the lead-up press—where there were strategic leaks about price gouging and profiteering compromising the LPG conversion grant—the grant hung on. The amount diminished but the industry is keen to make the best of the announcement of the Rudd government. It was put to me that there may be options and opportunities to improve the effectiveness of that grant. Perhaps registered converters with access to registration information could validate the eligibility of people seeking conversions and then have the money paid directly, with those seeking the conversions only paying the gap. That might be attractive, particularly for people without the cash flow to pay for the full conversion upfront. They would only need to pay the difference. In some cases in Victoria, where I think more than 40 per cent of the conversions that have been eligible for this grant have taken place, that might open up an enlarged market.

The LP gas industry would benefit from another opportunity that the government has through its own leasing arrangements. I was flabbergasted to learn that people with vehicles contracted through LeasePlan could not get LPG conversions as an after-market improvement. LeasePlan just would not have a bar of it. I found that odd for people who are trying to support the Australian car industry and looking for more environmentally friendly fuel consumption and fuel type. Unless it was done through the original equipment manufacturer, LeasePlan would not support it. That is disappointing and it is an area where government could do something constructive to support the LPG industry.

In the few minutes that are available I want to pay tribute to the Victorian Automobile Chamber of Commerce, the VACC. They do a terrific job and I certainly value their insights, their perseverance and the quality of their contribution to public debate. You can imagine my surprise when I learnt in the second week of May that the Rudd government decision about its skills council was going to leave the automotive industry out on a limb. I was surprised by that. At a time when I thought competency and skills in an increasingly sophisticated sector such as the automotive industry would be very important and when manufacturing so often holds up the automotive industry as an example of world-class, day-in, day-out endeavour and of what Australia and Australian companies can do, they were left out.

Manufacturing Skills Australia, which was going to handle vocational education and training, was not going to include anyone from the Australian automotive industry. They have been soaked up under the broader representation of the Australian Industry Group. I can understand why AiG would think that was a good outcome, and good luck to them. But, as the Executive Director of the VACC, David Purchase, said:

This decision has the appearance of a deal and that someone has been blowing in the Minister’s ear.

He went on to say:

This decision does not have the support of any of the key stakeholders. The car manufacturers, component parts suppliers, the automotive retailers and the union, all believe this decision to be incorrect.

…            …            …

VACC considers training to be of the utmost importance. As the largest automotive apprentice employer in Victoria and as one of the State’s leading skills training facilitators, we feel passionately about skills training.

This decision by Julia Gillard’s office has left the Automotive Industry confused. Why would they consider textiles and chemical manufacturers to be aware of skills training needs in the automotive sector?

How would manufacturers understand the skills required in automotive retailing? There is no point in making cars if you do not have a skilled aftermarket workforce to sell them, service them and repair them.

That is a point that I think many members in this parliament have been making in relation to the debate about the car dealership financing guarantee and the importance of the car industry to local economies.

Mr Purchase went on to say:

Nobody understands the training needs of the Australian automotive industry better than the automotive industry itself and that is why the Government must reverse this decision and leave training in the hands of those who know the Automotive Industry the best.

The Automotive Industry needs the ability to determine its own training arrangements and that has effectively been taken away from us.

All I can say is hear, hear; I agree. This is another opportunity where the government can show that its commitment to the automotive industry goes beyond some of the big public statements, the big media events. Perhaps if the skills council had had a hard hat opportunity that the automotive industry could provide, they might have got a better look in. This decision is a bad decision; it needs to be changed, and I encourage the government to do that.

In closing, I hope the Car Dealership Financing Guarantee begins soon to provide the support it purports to provide. It is great to have this bill before the House on a problem that has been created by the government—an own goal by the government—and that they are now seeking to at least do an assist pass so the automotive industry can help get itself back on track. It was supposed to have had a use-by date of 12 months. We are nearly halfway through that period already and dealers are yet to see a tangible upside from this measure. I hope it gets passed quickly and implemented even more effectively, because the industry needs it. I support the industry in my electorate. I hope they have a prosperous future and that they can get through this difficult period, but they can count on my support, just as the opposition supports this bill.

Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

I rise tonight to speak on my government’s Car Dealership Financing Guarantee Appropriation Bill 2009. In so doing, I would like to speak about the support that this bill will provide to many small- and medium-sized businesses, not only in the electorate of Flynn but throughout the whole of Australia, particularly in regional Australia, and the boost to business confidence that we are already starting to witness in the car retail sector as a result of early government intervention in this area. In no uncertain terms—and we all accept this—the car industry in Australia is hurting and hurting badly. The global financial crisis has taken a heavy toll on this industry, as with many others.

To look at the sales statistics is quite frightening. For example, figures released this month by the Federal Chamber of Automotive Industries tell a very sobering story. New passenger and commercial motor vehicle sales for April this year have fallen by 23.9 per cent compared to April of last year. On a year-to-date basis, sales have fallen on average by 23.3 per cent compared to the same period last year. I note that among the sharpest falls are sales of vehicles used by many small and medium businesses, such as light buses, trucks and heavy commercial vehicles, with a fall in sales of between 30 to 45 per cent year to date when compared to the 2008 figures.

On an annualised basis, it is forecast that some 172,000 fewer vehicles will be sold in 2009 compared to last year. This sharp fall in demand at the shopfront has filtered back to the factory floor with four local Australian vehicle manufacturers reducing production and implementing temporary stand downs, even introducing a four-day week for component manufacturers in an effort to get through these very tough times. As I said earlier, the Australian car industry is hurting very badly and we all recognise that.

Falling sales and production figures are not, however, the only bad news that this industry has had to face. You could be mistaken for thinking that matters could not get any worse for this industry, but late last year two large automotive finance companies announced that they would be withdrawing from the Australian market due to the global financial crisis. These companies, as we know, were GE Money Solutions—a part of the General Electric group—and GMAC, the automotive finance arm of the General Motors Corporation. It is estimated that up to one-quarter of new car dealerships relied on these two companies to obtain their wholesale floor plan finance.

Floor plan finance is a critical aspect of the retail car sector. Without it, the first option is to simply use the businesses cash flow to purchase vehicles for use in show rooms, which is not an option for many in the industry with the high upfront costs required to stock a dealership. The second option is, quite frankly, empty car dealerships with no stock on hand to sell. Both of these options provide little relief to an industry already hit with falling sales of around 20 per cent on average.

As we have heard in this House before, the Rudd government believes that it is not only the responsibility of governments to step in when the private sector retreats but the obligation of government to fill this gap. This has been the attitude of my government, which has stimulated our economy in the light of the global financial crisis and this is the attitude that the government has taken to help an already suffering car industry and the 66,000 Australians who are employed by it and their families who depend on it. Not only does the Rudd government believe in stepping in when the private sector retreats, we believe in doing so without trepidation and without hesitation to instil confidence where it belongs, in Australian businesses and in Australian homes.

In an effort to instil this confidence, particularly to an industry already hit hard by the global financial crisis, the government has introduced the Car Dealership Financing Guarantee Bill 2009, which will help fill the gap left by the departure of GE and GMAC and assist car dealerships access vital floor plan financing. The bill does this by the establishment of a special purpose vehicle, to be known as OzCar, which is a legally established trust that was set up on 2 January 2009. It, along with the support of Australia’s main four banks, will provide liquidity to eligible car dealers who would have otherwise been left without floor plan financing arrangements.

The government will not be providing direct funding to support OzCar; nor will it become involved in retail financing. Rather, this bill provides for a Commonwealth guarantee on the securities issued by OzCar that are risk rated below AAA by Standard and Poor’s. This guarantee will then ensure that all securities issued by OzCar will be rated AAA. The four major Australian banks will then provide the loan funds necessary to facilitate floor plan financing by subscribing to these AAA rated securities issued by OzCar. Credit Suisse is to take the role of the program manager and has entered into contractual arrangement and agreements with Treasury.

As the establishment of any trust is a very complex process and as government transparency and accountability are of the upmost importance, it is pleasing to see that the trust deeds and supporting material that outline the structure of OzCar are available to members of the public on the Treasury web site. Quarterly reports are also expected to be made available to parliament on the performance of OzCar. To help ensure that the risk to taxpayer funds is limited, funds will only be able to be advanced to dealerships that are not subject to any insolvency measures and loans will be consistent with the usual commercial lending criteria. Under this program, it will be possible to advance loan funds until 30 June 2010 and any notes issued will have a three-year maturity date. The government’s guarantee will continue to apply until these notes mature or are retired.

This bill will assist the Australian car industry over the next very challenging 12 months and, in conjunction with the Rudd government’s 50 per cent small business and general business tax break, provides further support for the car industry businesses, many of which are small and medium sized, and many of which are in regional centres, providing employment opportunities for local communities throughout Australia, including rural and regional Australia. It was reported by the Advertiser on 6 May 2009 that new car sales are forecasted to recover as a result of the assistance provided by these two government initiatives combined.

I have been lucky enough as the federal member for Flynn to have been able to gain firsthand insight into the recent challenges faced by the retail car sector by having in my electorate the president of the Motor Traders Association of Queensland, Mr Greg Klease. Mr Klease is a longstanding community champion of the people of the Gladstone region, for many years. He has extensive knowledge of the retail car industry, particularly in regional and rural parts of Australia. Throughout this difficult time faced by the retail car sector, Mr Klease has kept me reliably informed on various issues that have arisen and that affect his members, including floor plan financing. I thank Mr Klease for his efforts in this regard and for standing up for his members and his association. He has done so with distinction.

It is due to this bill’s widespread benefit across Australian communities, and the certainty and confidence that this bill helps create for businesses, employees and households that I wholeheartedly commend the Car Dealership Financing Guarantee Appropriation Bill 2009 to the House.

Louise Markus (Greenway, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

I rise to speak on the Car Dealership Financing Guarantee Appropriation Bill 2009, its impact on new car dealerships, the importance of those dealerships to local economies and concerns that the Rudd Labor government has not moved quickly enough to help new car dealerships have access to floor plan financing to stay in business. Why has it taken almost six months to throw a lifeline to these businesses?

The car sales industry in Australia is, or certainly has been, a vibrant, diverse, seven-days-a-week activity offering the widest possible choice with the best possible prices. That is competition in action, and competition works best when there are many outlets to choose from.

But car dealerships are not just about selling cars; they also have an economic ripple effect on local economies because they require a range of products and services supplied by local and regional business. It is about jobs. By the same measure, when a car dealership closes, that ripple effect is felt by all those local and regional businesses. For their own survival, businesses have had to put people off. People have lost their jobs and, of course, when that happens, families suffer. The simple conclusion is that we need to keep car dealerships operating during these challenging financial times. That is why the coalition will not oppose this bill.

There is no doubt about the downturn in new car sales in the past 12 months. New car sales figures released by the Federal Chamber of Automotive Industries for the month of April 2009 show a fall of 23.9 per cent compared with the same month in 2008. This was confirmed by senior executives of local car dealerships in my electorate of Greenway. I have spoken to a number of local car dealerships in my electorate and they have all reported a significant downturn. I am told that one in four businesses have reduced their stock levels or have let their stock levels run down. This is part of managing cash flow, but reducing the cost of holding goods also reduces their competitive edge by limiting choice.

I am extremely concerned about the slow progress of this bill and I encourage my parliamentary colleagues to ensure that the bill is fast-tracked through the House so that eligible car dealership businesses can get the help they need without further delay. This help was announced in December 2008. It is now the end of May 2009, close to six months later. There is the parliamentary process for the bill and then the bank lending process once a business has met the criteria and lodged an application for financing under the guarantee, so there is still some time to go before these businesses that are doing it tough and are on the edge will be relieved of the stress that they are now under. How long are they expected to hold on? And why did it take so long for the government to put this bill before the parliament?

Some questions need to be asked about the eligibility criteria for dealerships to access floor plan financing. Approximately one-quarter of new car dealerships obtained their finance through GE Money Motor Solutions and GMAC Australia, both of whom are exiting the market. This leaves a large number of new car dealerships without finance facilities. I am concerned that dealerships who do not meet the bank eligibility criteria and who cannot find alternative financing will exit the industry, thus reducing competition and impacting on local economies.

I urge the banks to ensure a fair go for businesses in establishing the criteria. I also urge the banks to consider the implications of any extra interest charges that may be applied for providing the guarantee. I have been advised by my local car dealerships that recent media speculation reports that banks are looking at imposing an additional two per cent interest rate on top of the current bank bill rate. Competition is great for consumers, but, to maintain a competitive edge, businesses often work on narrow margins. Even though the bank bill rate, like all interest rates, has gone down compared to previous years, it is still above three per cent for the big banks that will be providing the guarantee. If the floor plan financing request is for something like $5 million, then two per cent interest above the current bank bill rate will be a huge impost and in the end prove to be unsustainable for many eligible businesses. I would appreciate from the government some clarification of and focus on this very important issue.

I am concerned that this bill has a sunset clause of 30 June 2010, a mere 13 months away. We have already seen a delay in the implementation of this support and assistance. There are concerns from within the community that Australia has not yet felt the full effect of the recession. While the new car sales industry has been thrown a temporary lifeline, what will happen after 30 June 2010 if challenging times worsen?

The Rudd Labor government does not have a plan for recovery. They have put forward unrealistic and unbelievable estimates of when Australia will emerge from the huge debt and deficit created by this reckless government. In a short time, the Rudd Labor government has spent the substantial surplus left by the coalition and has gone on a reckless spending spree that has resulted in the worst debt and deficit since World War II. It means that every man, woman and child in Australia will have to pay back $9,000. With 10 per cent unemployment being forecast, how will families be able afford to buy a new car?

The coalition will not be opposing this bill. It is a lifeline for eligible new car dealerships. I will be watching very closely to see the impact. My hope is that it will work but again there are some questions about the adequacy of the bill in assisting car dealerships and whether all the detail has been thought through. I commend the bill to the House.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Car Dealership Financing Guarantee Appropriation Bill 2009. It is another example of the Rudd government acting swiftly and decisively to support another sector of the community which has been negatively affected by the global economic downturn.

In January 2009, the OzCar special purpose vehicle was established by the government to support interim funding to car dealerships. The OzCar SPV is designed to provide critical wholesale floor plan finance to eligible car dealerships so as to ensure that the departure of GE Money Solutions and GMAC from the Australian market and the liquidity challenges confronting Ford Credit does not result in the closure of hundreds of otherwise viable car dealers across Australia, resulting in thousands of job losses.

The car dealer SPV will be a trust that will raise capital by selling securitised assets to the four major banks, under the cover of a Commonwealth guarantee where necessary. The capital raised will be made available to eligible car dealers through participating financiers for a period up to 12 months. The car dealer SPV will provide wholesale floor plan financing only to eligible dealers. It will not finance any retail operations, capital loans or real property loans. To be eligible for possible wholesale financing under the SPV, a dealer must satisfy the following basic conditions.

The dealer must currently be financed by an exiting financier, that is, GE Money Motor Solutions or GMAC; the dealer must currently be a new car dealer or a mixed dealership selling both new and used cars from the same business or is currently a dealer in new motorbikes, boats, caravans, trucks and commercial vehicles with wholesale floor plan finance provided by GE Money Motor Solutions or GMAC; they must demonstrate that the dealership is a viable business consistent with the usual commercial lending criteria of recognised finance providers; they must be able to present up-to-date, accurate and comprehensive information on all aspects of the business as may be required by recognised and participating finance providers. Dealers who secure finance through the SPV will be subjected to regular audits consistent with best practice industry standards.

Car dealers will in the first instance apply for wholesale floor plan financing from a participating financier of their choice. The financier will make a commercial decision as to whether they have the willingness or the capacity to finance the dealership from their own resources. If a participating financier cannot accommodate the dealership, yet the dealership satisfies the overall eligibility criteria for SPV financing, the financier may arrange finance for the dealership through the SPV.

The SPV will not be providing any subsidised finance to any eligible car dealer. The cost of finance from the SPV will be market based and reflect current developments in the Australian and global capital markets. Car dealerships generally cannot remain in business without a viable floor plan financing arrangement.

Credit Suisse is acting as program manager of this special purpose vehicle, with Perpetual Trustee undertaking the role of trustee. A number of other high profile service providers, including Standard and Poor’s, Deloitte, Liberty Financial and Allens Arthur Robinson, are providing the necessary supporting roles, ensuring the utmost scrutiny and accountability of the scheme. The Australian government will be providing a Commonwealth guarantee on the subordinated notes issued by the SPV to ensure that Australia’s leading banks are able to provide sufficient capital for the SPV.

Much of the automotive industry around the world has been in crisis in recent years. For many manufacturers, particularly those in the United States, the global financial crisis has caused a major upheaval to the automotive manufacturing sector. Chrysler Corporation filed for chapter 11 bankruptcy protection on 30 April 2009. Both General Motors and Ford are having to reassess their operations.

There has been a sharp decline in car sales worldwide because of the global financial crisis. The second half of 2008 saw the most savage contraction of demand for new cars since the Second World War. Compared to the same period 12 months earlier, car sales in December 2008 fell by 36 per cent in the United States, 22 per cent in Japan and 16 per cent in France. In China and Brazil—both rapidly growing emerging economies—previous quarters of strong growth became sharp declines in the last quarter of 2008.

I would like to quote Mr Sergio Marchionne, CEO of the Italian car manufacturer Fiat, because I think it shows just how dire the situation in the global automotive industry is. Fiat has experienced a near miraculous revival in recent years and the company is seen as one of the strongest and most stable in the global auto industry. Fiat recently acquired 20 per cent of Chrysler. When describing the current industry situation, Mr Marchionne said:

What we are seeing is unprecedented. I have never seen the failure of so many systems at once.

That statement from someone who understands the industry effectively highlights the significant and serious situation the industry is in. What is happening overseas with car manufacturing regrettably has a profound impact on car manufacturing here in Australia, particularly for Australia’s three local manufacturers, Ford, Toyota and General Motors Holden. Production by the Australian automotive industry peaked in 2004 at around 412,000 vehicles. This fell to around 324,000 vehicles in 2008 and, with current negative trends in monthly production figures so far this year, we can expect another significant decrease in production for the year 2009.

In South Australia, my home state, Mitsubishi has closed its manufacturing operations with around 1,500 people losing their jobs from the Tonsley Park and Lonsdale plants. At its peak, Mitsubishi employed around 5,000 people in South Australia and supported thousands more working in the supplier industries.  We have also seen a downsizing at the GMH plant at Elizabeth, with employment numbers falling in recent years from around 4,500 employees to a current level of around 3,000 employees, as a direct result of the global economic downturn which caused the drop in sales and subsequently a drop in production. The 3,000 employees at GMH have also lost overtime earnings as the plant moved to a single-shift, two-crew operation in April 2009. Also of concern is that since 2004 there has been a shift in sales away from locally produced vehicles. Even in the years when there has been a strong growth in new vehicle sales the percentage of vehicles sold, that were manufactured in Australia, has declined.

Automotive production, like all manufacturing, is directly linked to sales. The global economic crisis has had a direct effect on consumer spending and automotive sales. Sales of new vehicles in Australia fell in April 2008 by 24 per cent compared to the previous year. Sales year-to-date for new vehicles have fallen 20 per cent compared to the previous year. Sales have also been affected by the withdrawal or retraction of wholesale funding to automotive retailers. In particular, the withdrawal of GMAC Finance from the Australian market has had a serious impact on car dealers.

There are three specific financing firms for retailers that this bill addresses: GMAC, GE Money Motor Solutions, both of which have exited the Australian market completely, and Ford Credit, which is facing significant liquidity pressures that impact its ability to lend to Australian car retailers. All three of these firms have American parent companies that are experiencing difficulties because of the global economic crisis.

GMAC is the automotive finance business of General Motors. GE Money is part of General Electric, a large American multinational firm that owns a range of media, technology and financial services. Ford Credit is part of Ford Australia. I understand that the government has received assurances from Ford in the United States that Ford Credit will remain in Australia and continue to support the Ford dealer network, and I welcome that assurance. Both General Motors and Ford have manufacturing plants here in Australia, so in many cases it is locally made cars that are being financed by these firms. It is in the United States, where the global economic crisis began, that the crisis is having a devastating impact on many established companies. The effect of the global economic crisis on the parent companies of these automotive finance firms here in Australia has resulted in car retailers having difficulty in accessing finance. So what is happening in the US is directly affecting what is happening here in Australia. It is this funding gap that this proposal seeks to address.

Since the withdrawal of finance by GMAC and GE Money, around 60 per cent the auto dealers have secured alternative funding arrangements. Without these funding arrangements, two serious consequences result from the fall in auto sales. Firstly, manufacturing declines and car manufacturers already struggling are placed under further stress and more jobs are lost. Secondly, local auto retail businesses that are also being squeezed by the economic downturn simply cannot survive. Local businesses close and the ripple effect exacerbates already struggling economies.

This is particularly so in rural and regional areas. Many auto dealers in rural and regional areas are unable to access alternative finance relationships because of their volume of sales. These are businesses that have already been negatively impacted by other factors affecting rural and regional Australia, such as drought and flooding. The closure of a car dealer not only has a direct impact on the economy of the local community, but it adds to the costs of locals who in turn are forced to travel further distances for their motor vehicle services and repairs.

The financial difficulties for the car manufacturers in America have already had a devastating impact on their own dealers. Just weeks ago Chrysler cut 789 of their dealers, that is 25 per cent of their total. At the same time GMH advised 1,100 of its own retailers that their franchise agreements would not be renewed, and they expect to cut another 500 dealers in the months ahead. The global economic downturn has led to the closure of nearly 2,000 US car dealerships from these two brands alone with the loss of thousands of jobs. It is imperative that the Australian government does everything in its power to prevent a similar situation arising here in Australia.

I understand that several Mitsubishi dealers within Australia have been unable to access alternative financing since the closure of GMAC and GE Automotive. These dealers have been provided with temporary finance arrangements by Mitsubishi Motors Australia Ltd, but I understand that these arrangements expire at the end of June. These dealers who are currently unable to access alternative finance would benefit from this very measure. It is critical, therefore, that this legislation passes quickly through parliament and therefore provides dealers with the much-needed finance that they will be requiring in order that their businesses remain viable. I seek leave to continue my remarks later.

Leave granted; debate adjourned.